This research and information on MLM (multi-level or network marketing, etc.) was prepared with the help of top experts over fifteen years by the Consumer Awareness Institute, directed by Dr. Jon Taylor. Quantitative MLM data collection was conducted by SEO expert, Jonathan E. Brand. Opinions vary widely on MLM's legitimacy. But here you will find independent research on success and loss rates, compensation plans, viability of MLM as a business model, etc.

What went into the research by Consumer Awareness Institute. The investigative research that formed the basis of these reports includes:

Analysis of the compensation plans of over 500 MLM programs

Extensive comparative research on MLM compensation plans and alternative business models to clarify differences

Worldwide feedback from thousands of MLM distributors and ex-distributors in a wide variety of MLM programs over a period of over 15 years

Interviews with the top experts in the field

Surveys of hundreds of tax professionals where MLM is concentrated – representing millions of tax returns of MLM participants

IMPORTANT: The estimates in Table 1 below are based on our careful analysis of reports published by the MLM companies themselves. These extraordinary loss rates were derived by removing typical deceptions from the reporting of these recruitment-driven MLMs1. Before forming your own conclusions, you are urged to perform your own research and calculations based on actual company data, which all MLM companies should provide for prospects.The odds of profiting by investing in a clearly illegal no-product pyramid scheme2 (with all winners re-investing) is approximately –

667 times as great as the odds of profiting after enrolling as an Amway/Quixtar “distributor”

111 times as great as the odds of profiting after enrolling as a Nu Skin “distributor”

69 times as great as the odds of profiting after enrolling as a Melaleuca “distributor”

The odds of winning from a single spin of the wheel in a game of roulette in Las Vegas*** is approximately –

286 times as great as the odds of profiting after enrolling as an Amway/Quixtar “distributor”

48 times as great as the odds of profiting after enrolling as a Nu Skin “distributor”

22 times as great as the odds of profiting after enrolling as a Melaleuca “distributor”

Similarly, the odds of winning with a single bet on snake eyes in a game of craps in Las Vegas are far greater than the odds of profiting from any of these MLM programs.In fact, the odds of earning a comfortable "residual income" from virtually any MLM is no greater than the odds of throwing three sets of dice and getting snake eyas all three times!

CONCLUSIONS:

Contrary to popular belief, the worst pyramid schemes are product-based – or recruiting MLMs*, such as the ones listed above. One can do far better gambling in Las Vegas. We're not promoting gambling - just fair trade practices, as manifested in legitimate business opportunities (as opposed to phony MLM chain selling schemes, or product-based pyramid schemes). The US Cult Expert, Steve Hassan, has seen many MLM participants require professional intervention.

Table 1

MLM COMPANY3

Approximate percentage of MLM participants whoLOSE MONEY4 (spend more than they receive)

Approx. percentage who realize a profit4 after all expenses

AMWAY/QUIXTAR

99.99%

0.01%

RENAISSANCE (RTTP)- defunct

99.98%

0.02%

NIKKEN

99.98%

0.02%

SYMMETRY

99.96%

0.04%

CYBERWIZE

99.94%

0.06%

NUSKIN/ PHARMANEX/BIG PLANET/ ETC.

99.94%

0.06%

TELCOM CO. - defunct

99.92%

0.08%

ARBONNE

99.92%

0.08%

RELIV

99.90%

0.10%

MELALEUCA

99.87%

0.13%

FREE LIFE

99.69%

0.31%

HERBALIFE

99.42%

0.58%

1 A “recruitment-driven MLM” is a multi-level marketing (MLM) program that uses a compensation plan that allocates the majority of its payout to participants to those who recruit a large downline of participants, rather than to front-line sales persons for sales to persons not participating in the scheme. I have analyzed the compensation plans of over 400 MLM’s, all of which were found to be recruiting MLM’s, in which participants must aggressively recruit a large downline to profit significantly. Based on more recent data from the companies themselves, the loss rate for recruiting MLM’s is approximately 99.6%; i.e., 99.6% of ALL participants lose money after subtracting all expenses, including purchases from the company. Read about the “5 Red Flags” in the compensation plan that signal it is a recruitment-driven MLM – as are virtually all MLMs.

2 The odds of profiting from a classic 1-2-4-8 no-product pyramid scheme increases from 6.7% to 12.5% for those who drop out after completion of a pyramid cycle; i.e., without reinvesting in a new pyramid. For references and public records used as bases for these calculations, see the author’s research reports posted on this web site. 3 Gambling statistics were obtained from Caesar’s Palace in Las Vegas.

3 Last updated in approximately 2006, although the statistics tend to remain fairly constant over time becasue the compensation systems that produce these results rarely change.

4 The estimates are based on our careful analysis of reports published by the MLM companies themselves. These extraordinary loss rates were derived by removing three sources of deception from the reporting of these MLM’s:(1) the practice of not counting ALL who signed on as distributors (agents, consultants, etc.) in the population of recruits who attempted to make the program work for them, but instead counting only those still “active;” i.e., deleting all dropouts in the calculation,(2) not subtracting expenses, especially products and services purchased from the company to qualify for commissions, plus minimal operating expenses, and(3) assuming legitimate sales of products (to customers not in the network) that did not occur.You may also want to read how Jon Taylor discovered the abysmal loss rate of MLM in chapter 1 of his new e-book titled The Case (for and) against Multi-level Marketing.

To order printed copiesIf you prefer to have us print and mail to you a coil-bound copy of the book, please send us your address and a check or money order in the amount of $65 ($85 for hardbound) to –

Consumer Awareness Institute291 E. 1850 Southbountiful, UT 84010

For copies of the "Regulatory Capture" report, send $35. Shipment may take about two weeks.For two-day priority shipment, send an extra $10.

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Disclaimer: These reports are intended purely to communicate information in accordance with the right of free speech. They do not constitute legal or tax advice. Anyone seeking such advice should consult a competent professional who has expertise in endless chain or pyramid selling schemes. Readers are specifically advised to obey all applicable laws, whether or not enforced in their area. Neither the Consumer Awareness Institute nor the authors assume any responsibility for the consequences of anyone acting according to the information in these reports.

Sample Readers' Comments

Congratulations for a great lifetime of research! Coming from a background of IT and Political Sciences, I like and appreciate the scientific way in which you present information.– Claire Zarb

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OMG, Dr. Taylor, your research is incredible and a direct hit. I'm trying [to counter this], but this cult is getting stronger as our economic down turn continues to plague us. . . It is sad in this case because this family will pull their son from his sophomore year at University of San Francisco to work full time in this MLM cult. I escorted my family members to this conference and felt like it was a version of the Jonestown revival act episode II. - Karen H., California

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"Thank you for your great insights and all the work you have put into researching this little-understood subject. If every [person] interested in joining recruiting MLM's would just take the time to read your [reports] and educate themselves, they could save a lot of grief." —Michael Rawlings

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"Thank you for your work on MLM! It is exactly what I've been looking for to get a data-based picture of the opportunity I am currently pursuing. Your logical questions and objective research are exactly what is needed in this industry." —Donna Horowitz